A new financial plan for the region’s highway network includes scenarios of $1 or $2 tolls on all lanes of an expanded Hampton Roads Bridge-Tunnel, Monitor-Merrimac Memorial Bridge-Tunnel and High-Rise Bridge.
The plan is being reviewed this week by city officials and representatives from across Hampton Roads as they try to figure out a way to build the region’s most important and most costly projects by 2040.
The scenarios highlight the harsh funding realities facing decision-makers. Even the most aggressive tolling option in the plan estimates that revenue from the fees would leave a funding gap that would have to be closed by $750 million in additional government funding or about $20 million annually in additional tax revenue.
The plan has been in the works since June, said David Miller, a managing director for The PFM Group, which prepared it for the Hampton Roads Transportation Accountability Commission. It was presented publicly for the first time Tuesday to the commission’s Funding Strategies Advisory Committee.
The report, titled “HRTAC Regional Financial Plan Initial Scenarios,” provides baselines with which the public and its elected leaders can debate the role that tolls should play in Hampton Roads’ future. It covers an estimated present-day value of $13 billion to $14.5 billion in projects, including:
- Three segments of I-64 widening on the Peninsula
- The Fort Eustis Boulevard Interchange project
- Two phases of the I-64/264 interchange rebuild
- The High-Rise Bridge expansion in Chesapeake
- Expansions of the Hampton Roads Bridge-Tunnel, the Monitor-Merrimac Memorial Bridge-Tunnel and I-664
- Construction of Patriots Crossing
- Construction of the Route 460/58/13 Connector
The analysis by The PFM Group includes six scenarios. Scenario No. 1 looks at tolling only Patriots Crossing at $2 and not tolling any other project. That would leave a funding gap of $6.1 billion, or about $230 million in annual tax revenue, to complete all the projects.
A second scenario calls for tolling Patriots Crossing at $2 but also adding High-Occupancy Toll lanes to an expanded High-Rise Bridge, HRBT, MMBT and the Rt. 460/58 connector, and converting the existing HOV lanes on I-64 to HOT lanes. The HOT lanes option would keep some lanes free on all those projects but provide tolled lanes for people who want to pay to avoid congestion or use them for free by car pooling.
The HOT network scenario leaves an even bigger funding gap because of the additional construction costs involved in separating traffic to make it work. That gap would require almost $7 billion in additional government funding, or $265 million more annually in tax revenue.
The remaining four scenarios call for tolling all lanes of the High-Rise Bridge, HRBT, MMBT and Patriots Crossing, and putting HOT lanes on the Rt. 460/58 Connector. They look at $1 or $2 tolls on those crossings, as well as $1.50 or $3 tolls on the HRBT during peak congestion hours. The toll rates were inflated by 2.5 percent annually for the financial estimates.
All the scenarios assume the use of $6.3 billion in present-day value from regional taxes and the bonds that revenue could support between 2014 and 2038.
The $2 toll scenario left a funding gap of nearly $1.9 billion to finish the projects by 2040. Increasing the HRBT toll to $3 during peak travel times reduced the gap to $750 million.
When the HRBT opened in 1958, it carried a $1.25 toll per vehicle, plus 25 cents per passenger, Miller said. That $1.25 toll then is the equivalent of $10.58 now, he said.
The scenarios did not consider public-private partnerships that would use private equity and require profit-generating toll projects. PFM was not asked to provide those scenarios, and Miller’s presentation gave several reasons why such an arrangement would not work.
A single public-private deal for so many projects would be prohibitively too large and likely not be priced efficiently, with projects being built at different times, the presentation said. And trying to split them up into individual deals would result in multiple private toll operators competing against each other, each with its own objectives and profit motives, it said.
(Correction: A previous version of this story misstated the day of Tuesday’s presentation.)